Agents Are Hearing Buyers Want To Wait Because They Think Prices Will Plummet

A report from the Arizona Republic. “Interest rates are up, and home prices are down a bit in metro Phoenix. The median home price in the Phoenix area is down about 2.8 percent from the record high in July. ‘The housing market is going back to a more normal balance now,’ said Tina Tamboer, senior housing analyst with the Cromford Report. ‘We won’t see a big price drop in the Phoenix area, but prices could go flat for a while. That’s not necessarily a bad thing.'”

“Metro Phoenix’s median home price is about $260,000 now, compared to a record $268,000 in June, according to the Arizona Regional Multiple Listing Service. Home sales so far this year are down about 6 percent, compared to 2017.”

“Matthew Coates of Chandler-based Revelation Real Estate said the recent slowing due partly to interest rates means there’s ‘going to be a slight tick downward in what price sellers are willing to accept.'”

“Tamboer said some Valley sellers are asking too much for their homes and are going to have to readjust their expectations because prices aren’t climbing like they were six months ago.”

“Some buyers are hoping for prices to drop more so they can find bargains. Real estate agents are hearing from buyers who want to wait because they think Valley home prices will plummet like they did in 2009-11.”

“But those agents and all housing experts agree there’s not another bust headed for metro Phoenix anytime soon. Metro Phoenix prices skyrocketed 50 percent during 2005-06 and then plummeted by even more than that during the crash. Home prices in metro Phoenix have climbed steadily between 6 and 11 percent since 2011, but it’s been no boom.”

“In January, Tom Ruff of The Information Market/ARMLS, said strong demand from buyers for a short supply of homes priced below $400,000 coupled with higher interest rates could slow prices and sales in metro Phoenix this year.”

“He said that’s what we are likely seeing now. And other housing markets are seeing it too, some even more so. According to the National Association of Realtor’s third quarter report, here are the U.S. cities with the biggest recent price declines.”

This is just my perspective but I watched it seize up a few months ago. Houses went from gone in an instant to sitting on the market.

The higher-end flips my wife and I toured are still sitting on the market multiple months later and slowly dropping in price. I saw a house in the same neighborhood for a much better price, approximately $150K less than the flips, advertising that they’d review offers after a week. Guess what, we’re past the review date by a bit and it’s sitting…

Ebola indeed but well earned. Prices are up at least 20% in the last 2 years in our crappy renter’s neighborhood. Sometimes I run the mortgage payment on current prices/interest rates and I cringe. Rent is up as well but, man, these people are getting ripped compared to what we’re paying in rent. “But the appreciation/equity!”, is what they’re probably thinking. Speculation is a hell of a drug.

This is actually one of the most entertaining times of the real estate bust – when the music stops and all the specuvestors realize they are the greatest fools and there is no buyer for their high-priced “flip.” Foreclosure is coming for many, after countless sleepless nights…

I personally find the transition from the denial stage, where we are currently, to the anger stage, where we will soon arrive, most entertaining, if a bit frightening. Every greater fool who made a bad recent purchase decision will soon be seeking a scapegoat to sacrifice, rather than accepting responsibility for the consequences of their own poor financial decision.

Tamboer. Kind of sounds like that word you yell out when the cut tree is falling to the ground. Atleast he was honest about buyers not wanting to repeat the fall back at during the last bust. He was not honest in his “not going to crash again” comment. Actually no one knows for sure but is possible.

Live how the agent’s comments have back peddled in,the last couple months from: market is great, to slightly optoma stick or aspirational pricing, to slight normal seasonal variation, to returning to balance, slight downturn but not going to crash again. What do you suppose is the next shoe to drop? I think we know. This is most fun I have had in a while. Of course, my place will drop too but that is ok if you are looking to move up in the near future as I am.

In China there is an apocalyptic housing bubble caused by the idiots who run the Chinese Communist Party. The party created these massive bubbles to keep the people happy. The party remembers Tiananmen very well…There are more than 50 million empty housing units in China.

The Yuan also has to be propled up with draconian capital controls.

The Chinese connection to the global housing bubble is obvious. Their crazy housing bubble will burst and coupled with capital cobtrols, destroy prices not only for Chinese real estate but Australian, Canadian and American real estate.

If China the most populous nation in the world can have a bubble that means any market can have a bubble. Real estate agents and their media henchmen peddlers are total liars when they say prices always go up!

Hmm, my comments dis not log into the right place. It was in response to ELpH and….

The Chinese connection to the global housing bubble is obvious. Their crazy housing bubble will burst and coupled with capital cobtrols, destroy prices not only for Chinese real estate but Australian, Canadian and American real estate.

Nashville, Denver ,Portland is where you can get burned will bad. Especially Denver, Portland it turns on a dime so quick, these towns especially think they are big time cities where as they are pretenders towns prop up by our favorite real estate agents and local banks who talk up the “everybody wants to live here nonsense.”

This is great! Love this posters “what I want from a realtor on realtor.com”

A realtor that knows what he/she is doing.

Raise the qualifications and CE requirements. Make the test harder than 5th grade gym class. And grade different levels/ranks of Realtors. Journeyman to Master based in CE, sales and license level.

The CBRE is a joke, nobody fails its so easy.

Make all states reciprocal in licensing.

Make all listings accountable for accuracy and disclosure. Do a minimal effort requirement. At least half the listings are legally fraudulent because the agents know there is no force of law or board to take action or they just don’t know how to list properly.

Listened to the NAR sponsored real estate show on Bloomberg radio yesterday for a bit – even they admit the market has turned – in fact it was the featured topic. The low volume must be killing their agents – and forcing them to take other jobs and therefore less membership dues. One agent even said its nice to move away from an environment where sellers think they can ask anything for their (crummy) property. They still painted it as a “balanced” market, but as they are always RE pimps the truth is things must be fairly bleak.

“Matthew Coates of Chandler-based Revelation Real Estate said the recent slowing due partly to interest rates means there’s ‘going to be a slight tick downward in what price sellers are willing to accept.’”

Hey Matt, Mr. Market doesn’t give a rat’s ass about what price sellers are “willing to accept.” It only cares what a creditworthy buyer is willing to pay, and that amount won’t be making a “slight tick downward” in a cratering market.

“Real estate agents are hearing from buyers who want to wait because they think Valley home prices will plummet like they did in 2009-11. But those agents and all housing experts agree there’s not another bust headed for metro Phoenix anytime soon.”

For the record, all those MSM-favored experts and real estate agents who insisted back in 2007 that prices would never fall ended up with so much baked crow on their plates that they couldn’t possibly eat it all.

It would be horrible to see a mountain of baked crow go to waste again.

One of my best pre-2007 bubble collapse conversations about real estate was with a Phoenix home builder who was visiting his ex-wife, who lived a few doors up from us. This guy was a true believer in “real estate always goes up “, and no amount of factual evidence to the contrary could shake his faith.

I work with one of those types. He’s only 24, so he really doesn’t even remember 2008. He has only seen the bubble reflate and he is convinced that if he can just refinance and invest in a 4-plex that he’ll be able to retire by 30.

And those figures are nothing. They should be quoting median SALES PRICES. They should not be quoting differences in yoy of may metric. That is the last trick for the RE industry. How about reporting month over month changes. The place where yoy is pertinent is in locations where there are distinct seasonal variations such as here in SW Florida. Our “season” begins around first of November but unofficially around Oct 1 when snowbirds start arriving. In one luxury zip code here there are 142 active listings. The last 30 days have seen 6 closings, 2 of which were foreclosures. Those contracts were from off season times, so next 30-60 days will be more conclusive. The cat will be out of the bag soon. Local news not reporting. Grab popcorn.

That article almost suggests that plummeting prices are limited to those eight U.S. cities. If I could figure out how to post it, I would share an article from this week’s Economist magazine about currently falling home prices internationally, in many different cities.

I believe that when the dust of history settles on the present market dislocation, it will almost appear as though prices began falling simultaneously worldwide.

CENTRE POINT, a tower that looms over central London, was empty for so long in the 1970s that it lent its name to a homelessness charity. Recently it was converted from offices to flats. Half are yet to find buyers. So the developer has taken them off the market pending a clearing of the political fog over Britain. Its boss complained to Estates Gazette, a trade paper, of bids that were “detached from reality”. One-bedroom flats were on sale for £1.8m ($2.4m).

Even flats with less hefty price tags have been hard to shift lately. Property prices in London are falling. Sellers are waiting for better prices. It is tempting to put all the blame on Brexit, but that would ignore the broader picture. House prices in big global cities increasingly move together. What happens in London has a growing influence on what happens in New York, Toronto and Sydney—and vice versa. And trouble is brewing in some of these other markets, too.
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What the heck happened to oil prices? But more significantly, what does it mean for the broader stock market and the global economy?

That is what has some Wall Street investors scratching their noggins, as crude futures and U.S. stocks staged a tandem tumble this week, just when investors thought the worst was over following a bruising October for risk assets.

Now, oil futures are unraveling, down at least 20% after putting in a 52-week high early last month. And it isn’t so much the descent into bear-market territory—as the recent slump for crude can be characterized—as it is the celerity of the selloff that has market participants unsettled.

About five weeks: That’s all it took for bulls to pivot from cavalierly pondering if $100-a-barrel oil was a genuine possibility before the end of 2018 on the back of Iranian oil export sanctions imposed by the U.S. on Nov. 4, to wondering how ugly the current implosion in black gold could get before finding a bottom.

On Friday, West Texas Intermediate crude for December delivery lost 48 cents, or 0.8%, to settle at $60.19 a barrel on the New York Mercantile Exchange, for the lowest front-month contract settlement since March 8, according to FactSet data. Prices lost 4.7% for the week, tallying their fifth straight weekly drop. The 10th session decline in a row matched the longest skid since 1984.

But beyond that, the most important question is this: What does oil’s decline really mean?

That is the query that Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., posed to MarketWatch via email last week as the decline in oil was gaining steam.

“Very large monthly down moves in crude oil has often heralded something more ominous,” he wrote on Nov. 1. “Most market observers think there is enough damage to see a bottom in stocks. Consensus therefore looks for new record highs or a solid bounce back. We strongly disagree with this perspective.”

But here’s the thing to know as it pertains to oil: the commodity has often been used as a gauge of economic health. Oil prices in a basic sense can function as the lifeblood of a well-functioning global market.

However, few market participants that MarketWatch have spoken with believe that crude’s current downturn is a reflection of global economic weakness and precursor of something more pernicious to come, like a recession.

“I think the drop in oil has more to do with the 1 million barrels worth of Iranian oil which wasn’t expected to be in the market, but now needs to be factored into the supply equation, because so many waivers were granted allowing firms to buy Iranian oil after all,” said Chris Zaccarelli, chief investment officer, at Independent Advisor Alliance. He’s referring to waivers granted to eight big importers of oil, including China, that may have capsized investors’ expectations for more damaging disruptions from sanctions against Tehran.

In other words, the decline in oil has been precipitated by a glut of supply that isn’t expected to be matched by demand, when the opposite had been expected just a few weeks ago.

Moreover, the correlation between oil declines and stocks aren’t always meaningful. Falling crude-oil prices don’t necessarily correlate with a parallel drop in stocks, in recent trends. The only point over the past 20 years that a drop in oil has coincided with a decline in stocks was during the height of the 2008 financial crisis (see chart below):

Back then, there were many forces at play that fed the global stock rout, including the bankruptcy of Lehman Brothers, which rippled throughout the financial universe.

There is even an argument to be made that a decline in crude prices can actually help to alleviate inflationary pressures on emerging markets as well as major developed economies, serving as a tax reduction to average consumers at the fuel pump.
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The Russell 2000 index has been falling fast, down 4.5% over the past 30 days

Don’t look now, but a closely followed gauge of small-capitalization stocks is on the brink of a bearish pattern.

The small-cap Russell 2000 index (RUT, -1.82%) is within a few points of seeing its short-term 50-day moving average fall beneath its long-term 200-day moving average, a formation in an asset that many chart watchers believe marks the point that a short-term decline morphs into a longer-term downtrend (see chart attached).

According to FactSet data, the Russell’s 50-day moving average is at 1,624.56, while the 200-day stands at 1,616.23, as of Nov. 9. That is an 8.33-point differential, or 0.5%, which means that the Russell 2000, which has been seeing a steady rate of decline over the past few weeks, could see a so-called death cross manifest as early as next week, should the current downtrend hold.

Shares of smaller companies had climbed more than their larger counterparts because they were viewed as more resilient amid growing concerns about the U.S.’s trade spat with China. Small-cap companies derive the lion’s share of their revenues domestically.

Investors piling in to the Russell 2000 drove the index to a 52-week high of 1,740.75 on Aug. 31. The benchmark is now more than 10% below that recent high.

The Russell hasn’t been as resilient to recent pains as it in earlier weeks. Its latest decline comes amid heightened concerns about the pace of rate increases by the Federal Reserve and the strength of the global economy. These are factors hitting the broader market. On Friday, with the Russell down 1.8% in afternoon trading, the Dow Jones Industrial Average (DJIA, -0.77%) and the large-cap S&P 500 index (SPX, -0.92%) were both falling sharply, threatening to register their worst declines in November after an ugly October period drove the Nasdaq Composite Index (COMP, -1.65%) into correction territory for the first time in two years and briefly erased year-to-date gains for the other main benchmarks.
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The downside of too much short-term volatility smoothing is the risk that valuations get much farther out of alignment with fundamentals than if market adjustment is allowed to proceed as Mr Market sees fit.

After a few decades of systemic misalignment, the market may find itself experiencing a multi-decades correction (e.g. like Japan from 1990-????).

Scottsdale AZ inventory up about about 120 listing in last 10 days.
The lower priced stuff in Gilbert AZ is still getting sold and replaced by new listings. The smaller the shack the higher the price per sq ft. Most under 1500 sq ft are priced about $212 sq ft. And they are basic crap shacks that should be about $89k.

Is your portfolio well positioned to absorb the impact of future rate hikes?

Good luck if you put all of your beans into a highly-leveraged housing basket.

Interest rates could hit new decade high even if Fed does nothing at its meeting
– The Fed is unlikely to make any new comments at all after its meeting Thursday, but that could cause rates to rise in the bond market.
– Bond strategists say some market players may be looking for the Fed to give a nod to the market volatility that drove the S&P 500 down nearly 7 percent in October.
– The Fed’s statement, at 2 p.m., is expected to keep the Fed on track for further rate hikes, and that could send the 2-year Treasury yield higher, to a new, more than decade peak.
Patti Domm
Published 11:30 AM ET Thu, 8 Nov 2018
Updated 3:02 PM ET Thu, 8 Nov 2018
CNBC.com
Federal Reserve Board Chairman Jerome Powell testifies during a hearing before the Senate Banking, Housing and Urban Affairs Committee July 17, 2018 on Capitol Hill in Washington, DC.
Alex Wong | Getty Images

The Federal Reserve could make no new comment at all after its meeting and still sound hawkish, sending the bond market into a tizzy.

“If the Fed reaffirms that it’s going to keep going after all that stock market noise in October, people may say, ‘Hmm, we didn’t really expect that,'” said Michael Schumacher, director rate strategy at Wells Fargo.

Bond strategists mostly expect the Fed to sound just like it did after its last meeting,ready to roll with its rate-hiking plans, when it issues its post-meeting statement at 2 p.m. That means another rate hike would be coming in December and the Fed sticks with its forecast for three more next year.

“I think the front end of the market will sell off and the long end will stay stable,” said Ian Lyngen, head of U.S. rate strategy at BMO.
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A bubble is an economic cycle characterized by the rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive sell-off occurs, causing the bubble to deflate.

Of course, the fund manager’s detractors would be quick to tell you, he’s been at it again, wrongly, since the Dutch East India Company went public.

OK, in his defense, it hasn’t been that long. And Hussman has earned some street cred along the way with some strong calls, including nailing the market collapses in 2000 and 2008. In fact, his fund surged to $6.7 billion in assets under management in 2010, before the weight of his misfires brought that figure down to $360.5 million over the ensuing seven years, according to the Wall Street Journal.

So, why do we care about his latest end-of-times outlook?

Maybe we don’t. But after an ugly month like October, doomsayers like Hussman just might resonate a bit more with skittish investors looking for their fears to be validated.

Monday’s early action is only raising more questions.

In our call of the day, the president of Hussman Investment Trust reiterated his longtime stance that there is a menacing “trap door under the market,” which could lead to the S&P 500 (SPX, -0.92%) losing two-thirds of its value.

“I have little question that Federal Reserve policy has again produced a bubble that will have extraordinarily disruptive consequences,” he wrote. “The advance of recent years has produced a toxic combination of extreme valuations in every conventional asset class, coupled with a breathtaking mountain of low-grade debt issued by Wall Street to satisfy the yield-seeking speculative demand of investors.”

Hussman, a former professor at the University of Michigan with a Ph.D. in economics from Stanford University, says there could still be some wild moves to the upside before the crash he’s been predicting finally comes through.

So get ready for more bouts of volatility (VIX, +3.80%).

“In the context of obscene valuations and unfavorable market internals… the only time we’ve seen anywhere near the number of classic top features as Sep 20, 2018 was the week of March 24, 2000,” he wrote. “We should periodically expect scorching advances from short-term oversold conditions.”

No “scorching advance” this morning.

The market

Futures for the Dow Jones Industrial Average (YMZ8, -0.22%), S&P 500 (ESZ8, -0.20%) and Nasdaq Composite Index (NQZ8, -2.37%) were all seeing lackluster action ahead of the opening bell. Gold (GCZ8, -0.20%) was trading at break-even level, while crude (CLZ8, +1.41%) futures were higher after a string of losses. In Asia (ADOW, +0.08%) major benchmarks traded in the red, while European indexes (SXXP, -0.57%) were facing selling pressure.
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The chart

John Hussman isn’t the only one ringing the alarm on the stock market. Chris Kimble of the Kimble Charting Solutions blog connected recent pricing action to the Florida recount with this illustration, saying “history doesn’t repeat, but sometimes it rhymes.”

“Will history repeat exactly this year? I doubt it,” Kimble said. “But, if multiyear rising support does happen to give way, selling pressure could increase similar to 2000.”
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SAN FRANCISCO — Firefighters are battling two deadly California wildfires that have claimed at least 31 lives, left more than 200 people missing and a quarter million under evacuation, while unhealthy smoke levels have prompted warnings to stay indoors.

The Camp Fire in Butte County, about 100 miles north of Sacramento, grew slightly to a total of 109,000 acres on Sunday, after destroying an estimated 6,500 homes and 260 businesses, mostly in the city of Paradise. At least five victims of the fire were found trapped in charred vehicles as they tried to flee the fast-moving blaze, authorities said.

Already ranked as the most destructive wildfire in California history, the Camp Fire’s death toll has now matched the 29 fatalities in a 1933 inferno. Officials of the California Department of Forestry and Fire Protection, or Cal Fire, said teams have been deployed to search for the missing, some of whom they said could be alive but trapped in rubble.
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Very sad. I have a friend that had his home burnt down but he and his family survived. Prayers go out to those who lost their lives up there and to those trying to survive. The question of why people want to live here is valid as we have so much risk at such a high cost but that’s the case in other states as well. Aside from moving to Antarctica, I don’t know many other places that are immune to fires or other deviation. On the flip side I do see this as another factor that should bring down RE costs as it did in Sonoma